Baltimore-based Merkle specializes in so-called “customer relationship marketing,” which includes crafting loyalty programs for marketers and managing their vast customer databases that hold reams of consumer information. It also offers a host of other digital marketing and technology services including search advertising and data-driven ad buying and analytics.

Terms of the deal were not disclosed but people familiar with the matter said the cash deal has an enterprise value of roughly $1.5 billion when including Merkle’s debt.

As part of the agreement, Dentsu said it will buy a Merkle stake held by private equity firm Technology Crossover Ventures, as well as other Merkle shares held by other shareholders. Merkle’s management and employees expect to retain a “significant” minority stake in the firm.

Closely-held Merkle had $436 million in revenue in 2015 and works on behalf of companies such as
MetLife Inc.,
Geico Corp., and Dell Inc. In recent years, it has invested in ad and marketing technologies to help power its clients’ campaigns. Its systems are closely integrated with Facebook, for example, so Merkle could help target ads for a retailer using the data the retailer collects from its customers such as email addresses.

Dentsu was attracted to Merkle, in part, for its data capabilities, which allow Merkle to develop highly targeted marketing efforts for its clients based on data it has on consumers.

“Their ability to develop people-based-marketing highlights where this business is going,” said Jerry Buhlmann, chief executive officer of Dentsu Aegis Network. “Convergence is driving our business towards a much greater level of addressability.”

Merkle is the latest deal in a long string of acquisitions by Dentsu, the fifth-largest ad company in the world, by revenue. It is seeking to reduce its dependence on its home market of Japan, which isn’t growing as fast as other countries.

Last month, it bought Gyro, one of the largest independent ad firms that specializes in business-to-business advertising. Its other acquisitions this year have included digital analytics firm Cardinal Path, digital agency Flock, and sports marketing firm Alesport Group.

The company said it has no plans to abandon that strategy. “We are still continuing to use acquisitions to accelerate our growth” and bolster Dentsu’s product suite, added Mr. Buhlmann, pointing to areas of continued interest such as social marketing, mobile and data marketing.

Merkle decided to sell to Dentsu because the ad company will be able to help Merkle expand in overseas markets with the help of its big footprint around the globe. Merkle has been trying to expand in Europe and Asia.

“To be able to bring capital to support our own acquisition strategy is a big part of this deal,” said David Williams, Merkle’s chief executive officer.

Dentsu Aegis was advised on the transaction by
Lazard
while Merkle was advised by Evercore.

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